CZ Lists Why Binance Decided Not to Buy the Bank

Following regulatory action from the SEC and other local and global watchdogs, members of the crypto community are concerned about the industry’s future relationship with the banking sector.

Europe’s Pivot in the Cards

Uncertainty about future crypto regulation was heightened following the collapse of both Signature Bank and Silvergate Bank, both of which supplied the infrastructure needed to keep the crypto world connected to the banking sector.

To make matters worse, the SEC’s refusal to respond to requests for information from Coinbase and other crypto platforms to cooperate signals that apparent regulatory agreements with US institutions made in good faith may be a way off. Are.

Some firms – such as Gemini, which recently announced the setting up of its EU headquarters in Ireland – have decided to look to Europe instead.

Binance thinks outside the box

Binance does not operate within the United States. To serve US customers, Binance.US was launched. Although the two platforms share the same name, Binance.US has a different organizational structure and does not report to CZ or other members of the global company’s C-suite.

For several months, Binance has been looking for a solution to crypto’s currently tenuous relationship with the banking sector, especially following recent disputes with Australian banks and fiat providers.

Fellow Binancean,

We regret to inform you that we are unable to facilitate PayID AUD deposits for Binance users with immediate effect due to a decision taken by our third party payment service provider. We understand from our third party payment service provider that the bank…

— Binance Australia (@Binance_AUS) May 18, 2023

In an interview on Bankless podcast, CZ said that he and his team briefly considered buying the bank outright to solve such issues without relying on others. however, he ultimately decided against it.

According to Exec, simply buying banks will not solve the problems of the crypto platform. Even if a bank was bought in the US, this would not guarantee regulatory approval in other territories.

Furthermore, the cost involved in buying and operating a bank may prove to be wasteful as regulators may forbid the bank from interacting with crypto in any way.

“Banks are not cheap. Banks are very expensive for very little business revenue. (…) The amount of capital required is quite high, and regulatory approval to buy a bank is the same as or more than setting up a new bank, which Very hard. If the banking regulators say, ‘look, you can’t work with crypto,’ they can take away your license if you do. So buying a bank doesn’t stop the regulators from telling you, “No. , you can’t touch crypto.” Still, we’ll need corresponding banks all over the world.”

Nevertheless, CZ said that he and his company are still considering making smaller investments in the banking sector, even if buying a banking institution outright is completely off the table.